Income on English estates rises to £494 per hectare

Despite economic pressures, the average gross income on English estates has increased by 1.7% to £494/ha during the 2011-12 year.

Results from Savills’ 2012 Estate Benchmarking Survey (England) show agricultural and residential sectors performed best during the 2011-12 year, with increases in total income of 6.9% and 5.5% respectively, while income from commercial and leisure sectors fell 7.1% and 9.3% respectively.

Cost saving measures proved effective with a fall in total expenditure of 1.2% to £198/ha – this led to a 4% increase in average net incomes (before depreciation, finance, drawings and tax) to £282/ha.

In the year to 5 April 2012 the average total return for let property on all estates was 9.4% – this was made up of 7.9% capital growth and 1.5% income return.

“From our survey it is clear that rural estates, through a range of property assets, are already managing the risk of income volatility,” said Savills head or rural research Ian Bailey.

“Restructuring of farm and housing stock tenancies is clearly having a positive effect on incomes. This will remain essential in order to counteract the ever greater peaks and troughs of commodity prices and the wider economic uncertainty.”

Key findings

  • Location is key to income – agriculture is the main income stream in the eastern regions of England. South East estates derive 47% of income from residential property and 20% from commercial assets, while the proportion of gross income from leisure in South West estates was higher than any other region at 7%.
  • In-hand farm incomes (net income after deduction for property repairs, insurance, third party rents and interest on borrowings) rose by 19% to £326/ha.
  • Income from contract farming enterprises rose by 47% during this period.
  • Growth in average agricultural passing rents (actual rent received) rose by only 0.5% to £173/ha while Farm Business Tenancy (FBT) rents increased by 1% to £227/ha.
  • Assured Shorthold Tenancies (AST) increased by 0.4% to an average of £8,355 per dwelling.
  • Income from commercial enterprises reduced from 16% to 13% of gross income – average office rents decreased by 6% to £9.20/square foot but average rent for retail units increased by 27% to £15.65/square foot.
  • Average leisure, woodland and sporting income fell by 9.3% – estate woodland is still under-utilised making little or no contribution to gross income but sporting income increased by 25%.

Gemma Mackenzie on G+

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